Thomas Hudson

"Delta Intends to Rectify it Gas situation"?

johnslloyd

[QUOTE=mother-;18330188]Talk about your vertical integration...[/QUOTE

So, what's next? DL buying up peanut farms & Biscoff factories?

tonypct

How about "Delta will process it's own gas from now on."

DaDaDan

"Delta, unsatisfied that air travel has become a commoditized business, deftly tries its hand at refining petroleum"

Frozentech

Not only is Trainer for sale by ConocoPhillips, they are spinning off the entire downstream (Refining/Marketing/Transportation) sector as Phillips 66 in about 1 month.

Thomas Hudson

As my rich uncle Luscious Jackson Hudson told me, "Cats who play with a dog's toys always get bit"

OnTheSlopes

[QUOTE=johnslloyd;18334110]Well they don't need the Biscoff factories anymore...you can still find the on the plane, but not frequently.

DL2SXM

[QUOTE=OnTheSlopes;18334791]Maybe they can also buy the cookie factory from Frontier.

AdamS

This makes no sense. DL could not get any of this fuel to their hubs except in NYC, unless taken by ship back to the gulf coast and delivered through pipelines.

I do not believe DTW or MSP can be reached through pipeline from this refinery but I could be wrong.

ClipperDelta

I'm no expert, but I believe this has to be driven by the ever-increasing "crack spread" (i.e., difference between crude oil and jet fuel price). If crude oil is $100/barrel, jetfuel is usually more than that due to refining costs. This "crack spread" has been widening (e.g., it was running at around $33 a barrel around the end of February - crude oil at $97/barrel, but jet fuel at $130/barrel). In a 'crude' example, let's say Delta owns a refinery and its all-in cost to refine crude into jet fuel is $28/barrel, and the market crack spread is $33/barrel, it would be able to save $5/barrel with this idea.

Prior to this, perhaps crack spreads never reached levels where owning a refinery would be worth it. So with such a transaction, they are essentially betting that not only will crude prices remain high, but that the crack spread will continue to maintain or increase from its currently high levels...

azeckel

It shouldn't matter at all. If DL buys a refinery, that refinery becomes part of its operations and costs and revenues from it flow directly to the income statement. If the spread is really high, then DL would essentially suck profits out of the refining division to subsidize the airline. They would achieve the same financial results as selling jet fuel on the open market from the refinery and buying it at the same rate for the airline. The ONLY way it makes sense is if there is some synergy that would allow them to operate the refinery more efficiently than others in the market, thereby increasing their "crack spread". To me, I just don't see how operating an airline qualifies anyone to run a refinery.

StayingHomeIsBetter

It got you to read the thread, didn't it?

I'm confident that the fans of Monty Python understood the significance.

StayingHomeIsBetter

[QUOTE=OnTheSlopes;18334791]Pleasant surprise... got to my FC seat the other day and there was a bottle of water (normal) and a Biscoff (pleasant surprise) waiting there for me.

Way to go crew!

DLdweeb

Priceless...

So let me get this straight. DL doesn't seem to like it when it's big suppliers are cutting capacity, reducing players in the market, and driving up the cost of the product. Well, what's good for the goose.......

RRDD

"Delta Air Lines is seriously considering the purchase of an oil refinery, CNBC's Kate Kelly reported on Wednesday. This would be a first for a major airline. According to the report, the deal Atlanta-based Delta would pay between $100 million and $150 million for the refinery........."

http://marketday.msnbc.msn.com/_news...ottomline&lite